Suppose That There Is a Positive Aggregate Demand Shock and the Central

question 24

Multiple Choice

Suppose that there is a positive aggregate demand shock and the central bank commits to an inflation rate target. But if the commitment is not credible,then

• A)the public's expected inflation will remain unchanged.
• B)the short-run aggregate supply curve will rise.
• C)over time inflation will fall back down to the inflation target.
• D)all of the above.
• E)both A and B.

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Definitions:

Henry Mintzberg

A renowned academic and author in the field of business and management, known for his theories on business strategy and organizational structures.

Interpersonal

Pertaining to the interactions and relationships between individuals.

Informational

Pertaining to information, often focusing on the dissemination, processing, or use of knowledge.

Decisional

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